The rejection at the important resistance area of 81.50 is bringing selling pressures in the Dollar index. The index after breaking the short-term upward sloping trend line has given signs of weakness and made a pause of the decline at the 50% retracement. The upward bounce was shortlived and did not break any resistance level and that is why the reversal made a new low towards the 61.8% Fibonacci retracement. Our strategy to go short from 81.30 with 81.50 as stop reverse is working great after the double top formation.
If the trend does not reverse from this area, we should expect prices to reach 80.25-30. Trend is down and next short-term support after 80.60 is the level of 80.40 (76.4% retracement and consolidation area).
In previous analysis I mentioned that the daily chart clearly shows that the rejection at 81.50 was almost certain to push prices towards the lower upward sloping trend line. Near 80.20-30 we will start taking profits and think of reversing positions if a bullish signal is given. For the index to reverse from these levels we will need an upward move above 81 to confirm short-term trend change. Until then we remain short and prefer short positions.
